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Autumn 1999 cover

National Observer Home > No. 40 - Autumn 1999 > Article

Russia's Crises: Domestic Discord and Foreign Policy

Since the establishment of the Russian Federation in 1991, Boris Zeltsin's Russia has been struggling to democratise its social and political life and capitalist economy, while coming to terms with its own past. Russia is regarded internationally in some respects as the heir of the Soviet Union. For example, it assumed without question the Soviet permanent seat on the United Nations Security Council. And, like the Soviet Union before it, the new Russia still aspires to be recognised as a global power alongside the United States of America. In this respect Russia still disposes of a nuclear arsenal of superpower dimensions and its military industries can still produce advanced weapons systems.

If Russia has ceased to be a power of major international significance it still exercises residual importance by reason of geography in Northeast Asia and other regions. Moreover, it is able to affect immediate arms balances through sales of advanced weapons systems and to affect diplomacy in many areas. Some Russians, including the Communist leader Gennadi Zyuganov, may think that it is merely a question of time before Russia recovers from its domestic turmoil and regains the status of a global power, not just a regional power as the West maintains. Thus there remains arguably a gap in perception between the Russians themselves and Western commentators.

Moscow under Boris Yeltsin's leadership recognises the importance of continuing political and economic relations with South Korea, China and Japan and adheres to the principle of a Korean Peninsula free of nuclear weapons, as reflected in its 1993 military doctrine.1 Improvement in Russian-ROK relations continued especially after Yeltsin's November 1992 visit to Seoul and the initialling of a new treaty on basic relations. As a result, Russian-South Korean trade has continued to expand steadily, from $1.2 billion in 1992 to $1.57 billion in 1993 and $2.2 billion in 1994. In 1995 trade soared to a record of $3.3 billion, with Russia recording a $447 million surplus.

Russia like China is committed to a Korean Peninsula free of nuclear weapons, and is interested in limiting the proliferation of nuclear weapons, as noted earlier. Much of the population of Primorskii is concentrated within a few hundred kilometres of the Russian- DPRK border. Any use of nuclear weapons on the Korean Peninsula would contaminate significant areas of the Russian Far East. In addition, any serious conflict nuclear or conventional could produce a stream of refugees across Russia's borders and could exacerbate differences between Moscow and Beijing over how to resolve the crisis, and thus could jeopardise Russia's amicable ties with East Asia's dominant power. Moscow's foreign policy establishment, therefore, is in agreement on the need to prevent North Korea from developing or utilising nuclear weapons.2 For example, the Yeltsin government has made clear its opposition to North Korea's possession of nuclear weapons.3 On this nuclear issue, Russia for the most part has co-operated with the United States and South Korea,4 because the presence of nuclear weapons on the peninsula would threaten the Russian Far East.5

Although Moscow in recent years appears to have wished to make its policies in the East more dynamic,6 its initiatives generally did not evoke a strong response in the region, mainly because the Russian initiatives and interests were perceived by the region as being directed more towards the United States and the West, rather than towards Asia. Forced by the bitter realities of its declining international weight, and with growing domestic dissatisfaction over the results of its economic policies, Moscow declared in late 1993 its intention to correct the pro-United States and pro-European tilt in its foreign policy and launched a more active diplomacy in Asia. President Boris Yeltsin visited South Korea and Japan, and met in Moscow with the leaders of China and India. Russia has thereafter become much more interested in ASEAN countries, especially in view of their role in the evolving security arrangements in the region.

The main directions and principles of Russia's new foreign policy in the region were stated by then Foreign Minister Andrei Kozyrev in his speech to the Chinese Association of People's Diplomacy on 27 January 1994.7 According to Kozyrev, Russia's first priority was an active development of business relations with member countries of this economically fastest growing region in the world. As the minister indicated, one-third of the total Russian foreign trade was already with Asia-Pacific states. Secondly, Russia's Asia-Pacific policy was to be based on the understanding that Moscow does not regard its contradictions with any regional country as irreconcilable, and that it will work consistently in favour of having stable and balanced relations with them all. Thirdly, the possibility of a major military conflict in the region was now greatly diminished, thus reducing the importance of military factors in international relations. However, in view of still remaining challenges to regional security, Kozyrev argued that there has been a need to respond to them on a collective and co-ordinated basis.

The main security threats and risks to Russia in the Asia-Pacific region are seen by Moscow in the following trends:8

ethnic conflict and tension in Russia's border areas, especially in Central Asia, as well as within Russia itself,

potential nuclear conflict on the Korean Peninsula,

tension with Japan over the unresolved territorial dispute and fishing issues,

military growth of China,

isolation from the economic integrational processes in the Asia-Pacific region, and

a destabilising increase in the number of foreign migrants in the Russian Far East.

Policy Adjustments

These challenges dictate the following priorities in Russia's policies in the Asia-Pacific region:

a military reform and adjustment to new regional security realities,

an active diplomacy in Central Asia in order to retain the region in its sphere of influence,

a resolution of the dispute with Japan and full normalisation of relations with Tokyo,

a continuation of dynamic but reasonable relations with China,

a more constructive role in the settlement of the Korean problem,

an accommodation of Russia's regions and ethnic autonomies, and

implementation of economic reforms in the Russian Far East with a view to enabling that region to take an active part in Asia-Pacific economic integration.

Russian foreign policy reached a turning point in 1996. Boris Yeltsin defeated his communist rival Gennadi Zyuganov in the presidential election in July of that year. His re-election demonstrated that democracy triumphed. Although the elections revolved around domestic economic and social issues, the results do have foreign policy implications. Yeltsin's original foreign policy team, including Kozyrev and Defence Minister Pavel Grachev, were replaced. The appointment of Yevgeny Primakov and General Alexander Lebed as Foreign Minister and National Security Adviser respectively in 1996 heralded a more professional foreign policy. However, General Lebed was removed from this key position, following accusations that he was planning to seize power with the help of the Russian military and Chechen rebels.9 And Primakov continued to lead the Russian Foreign Ministry until late August 1998 when he became the new Prime Minister of Russia. Divisions within Yeltsin's administration appear to complicate the task of co-ordinating foreign policy, despite Primakov's assurance that Russian foreign policy would be effectively coordinated under the aegis of his ministry.10 By the end of 1995, a consensus did emerge among the Kremlin's foreign policy experts that "Russia's status as a respected great power must be restored".11

Current Trends

Russia's position in Asia is circumscribed by its weak economy and endemic political and social crises. The situation in Russia today creates two main fears: economic and political. The economy has collapsed, the rouble has been devalued and thousands of Russians have started to withdraw their money from banks. Inflation has risen, imported goods are disappearing from the shops and the prices of those that remain are rising, with people starting to hoard; worried foreign investors are pulling out while international financial organisations grow increasingly reluctant to lend Russia more money.12 So great has been the failure of economic reform that many Russians look back to the stagnation and decline of the last years of communism as being happy times.

The danger is that the successor to President Yeltsin may discontinue reform policy and only offer false hopes. And with Russia still possessing a vast nuclear arsenal, there must be a concern that it does not fall into inappropriate hands. That is why Russia's economic prosperity is of vital importance to all of us. The West has an interest in promoting democracy and market economics in Russia. But it would be wrong to assume that it is in the West's power to bring this about, certainly not through economic assistance alone. In the end, it will be Russians who bring its period of misery to a close. And since late 1997, Yeltsin has been attempting to define a set of concepts, which is usually called the "Russian idea", for the nation itself.13 Caught between reform and realpolitik, Russia under Yeltsin is an economic mess.

Industrial production in Russia is down by more than fifty percent in the last five years; gross national product has contracted for five years running and life expectancy has plunged to fifty-eight years for Russian men. Workers in the coal-mining regions of northern Russia have gone for months without getting paid. Many pension payments have been late also.14 These factors, among others, have resulted in greatly increased criminal activity and the rise of the Russian mafia.

The process of transition has been beset by difficulties because the real problem has been the weakness of the state, which has been unable to consolidate the systems and structures that would ensure both governability and the smooth transition to a market democracy.

In Western Europe, the process of democratisation took centuries and did not prevent a series of catastrophic wars. In Russia, which has no tradition of capitalism and participated neither in the Reformation, the Enlightenment nor the Age of Discovery, this evolution is likely to be ragged.

Professor Stephen Holmes of Princeton University has observed:15

"Russia's disorder affects both state and civil society. The system of central control and coordination is in shambles. Incumbents are corrupt and incompetent ... The government is fragmented, unaccountable and seemingly indifferent to the plight of its citizens."

In other words, today's Russia lacks legitimate political authority. Instead of a civil society concerned with influencing the state, Russia has developed an "a-civil" society concerned with insulating itself from the state.16 It is reasonable to say that the transformation of the political and economic system in Russia was partly driven by the desire to combine political freedom with improved living conditions. However, Yeltsin's policies to create a market economy based on private property stimulated the emergence of a new set of economic interest groups and challenged economic groups from the Soviet ancient regime.

To date, a small handful of super-wealthy economic elites have organised politically to pursue their interests, while groups constituting the rest of Russia's evolving economic and civil society remain weak, disorganised and therefore marginal to political processes and outcomes. Poverty has become a reality among many segments of the population in the late 1990s. This growing gap between the state and society constitutes a threat to the emergence of a stable and liberal democracy in Russia.

Considerable doubt has been expressed over the ability of the current Russian government to make and implement effective policy, primarily in view of corruption, ineffectiveness of management and a lack of a stable political structure. The process of transition has been beset primarily by difficulties caused by the weakness of the state which has been unable to consolidate the systems and structures that would ensure both governability and the smooth transition to a market democracy. Furthermore, the efforts of the President to control personnel appointments through the Council for Personnel Policy and the Civil Service Administration may perhaps be seen as an effort to create a household bureaucracy. If that is indeed his intention, however, the likelihood of his success is extremely low, with political power being far too fragmented for such an outcome.

The reforms of Russia and Eastern Europe have depended too much on the West for aid. There has been an illusion that if these countries moved closer to the West, they could obtain foreign aid on a very large scale. Therefore, Yeltsin, Gorbachev and other leaders travelled around, begging for aid from the United States, Japan and South Korea. The IMF has provided considerable sums in assistance to Russia, very much as a result of American encouragement. The calculations are more political than economic, the aim being to ensure the continuation of democracy rather than to achieve reform and progress in the Russian economy. However, it is generally a mistake for countries to rely on foreign aid for economic development. Many countries begin to grow rapidly in their economies only after they are independent of foreign aid. China, for example, after the incident at Tiananmen Square on 4 June 1989, enjoyed continuing growth even though many aids and credits were frozen.

In regard to the future, to revitalise Russia's economy and make it prosperous the following probably will be necessary:

1. Increase political stability. Political stability helps to establish the authority of the government, so that the government's power can be utilised to readjust the dislocation of economic order.

2. Abandon dependence on the West. A people's dependence on their own efforts is the only way to obtain affluent life. Russia has vast territory, abundant resources, a relatively small population, a large number of trained technicians and intellectuals of high quality. After the reform of its industrial foundation, Russia could before long go into the normal operations of national economies. Russians are ambitious and seek national greatness. Admittedly Russia now is in chaos, but it has broken off the heavy burden of East Germany and its former Soviet Republics.

3. Continue reform and build a competitive infrastructure. Yeltsin is viewed generally by the West as the guarantor of market economics and democracy, yet Russia under Yeltsin is an economic mess. The failure to build a competitive infrastructure has had devastating consequences for the reform effort. It has also affected the operational practices and behaviour of Russian business institutions, which became more likely to view themselves as above the law and the public interest. In China, for example, the rapid growth of new business created a more competitive environment and a more acceptable code of behaviour. This generated the higher level of output and lower level of inflation that a competitive environment brings. Without such initiatives, Russia's economic situation would continue to be at a very critical stage. Without doubt, Russia's economic recovery and reform must ultimately rest on its own efforts.

During the recent Russian meltdown, Boris Yeltsin dismissed his longtime Prime Minister Viktor Chernomyrdin, dismissed his entire Cabinet and appointed Yevgeny Primakov as the new Prime Minister. Primakov declared that his government under Yeltsin would stabilize the economic situation and that Russia would not abandon market-style economic reforms, and he underlined stability of foreign policy, consistency in reforms and the lack of any alternative to market-oriented policies.17 Although seen as a competent administrator, his field of expertise is foreign relations, not economic policy.18

To talk of economic resurgence in Russia in the near future is to ignore current realities. The export branches of the economy oil and gas and natural resources are productive, and known reserves are massive. However, this is the only sector of the economy that is subjected to any order. Industrial and electronic operations are destroyed, with no investment forthcoming or likely in view of the crippled Federal budget.

Should Moscow's leadership resolve pressing domestic problems such as repairing its severely damaged economy, stabilizing its politics, reconstructing its administration, curbing the activities of the mafia and reducing government corruption and arbitrariness, improving the welfare of its people, recreating efficient armed forces and designing coherent policies for Asia, Russia could expand its influence in Asia in general and on the Korean Peninsula in particular. The sudden decline in South Korea's economy in late 1997 has further complicated Russia's relations with Seoul. It needs time to put its house in order. Russia can be expected to remain in a state of political and economic turmoil for the near future.

Yeltsin is viewed generally by the West as the guarantor of market economics, democracy and peaceful international conduct. However, some of his actions in relation to peaceful international conduct are questionable.

In pursuit of security, Russia has produced insecurity for its neighbours, and it appears that Moscow attempts to uphold its right of military intervention in countries containing Russian minorities. Two Russian divisions are being maintained in the territory of Georgia, and Russian intervention in a civil war made that country ungovernable until Russian conditions were met. Further, Russia's encouragement of the conflict between Azerbaijan and Armenia has given Moscow a voice in both countries and blackmail potential over Azerbaijan's vast oil reserves. Russian troops participated in the civil war in Tajikistan in 1996. Russia refuses to demarcate borders with Ukraine and is pressuring the oil-producing nations in Central Asia to export their oil only through pipelines running through Russia.19 All of these events have happened under Boris Yeltsin.

Concluding Remarks

Today, Russia is militarily weak, systematically in turmoil, and economically in decline. Depending more on the behaviour of others than on its own wishes, Russia's options appear to be limited for the foreseeable future.

Although Primakov may assume that economic growth may be achieved in the near or medium-term future, Russia does not seem poised to record the growth rates recently experienced by China. Even if economic growth in European Russia escalates, the Russian Far East will probably be left behind. And since influence in Asia will increasingly depend on economic strength, Russia will be consigned to a marginal role at best over the next decade.

National Observer No. 40 - Autumn 1999